Former Founder & CEO at Soulware Global Development

Economic Tectonics

Besides forecasts by world organizations, the only certainty is that global economy is entering a laterality phase, which leads towards stagnation. Things will move again whenever the light comes back to show the path for the challenges the economy is facing today. This will take quite a long time, though.

Global context

On one side there are oil prices, fewer regulatory barriers and tax incentives. On the other side there are Brexit, China deceleration (probably under 6%) and low economic growth for commodities exporting countries, specially within Latin America). All these factors belong to the specific equation that turn economic growth a complete uncertainty.

Oil prices are now around 55 USD. There are not any expectations beyond 60 USD in the upcoming years. Big American oil companies have improved productivity and current fares are already profitable even if geopolitics start to play a major role or even if huge shifts change the global economy of the future, economic tectonics, in this case, might not seem a possibility.

Tax incentives and fewer administrative barriers come from electoral and post-electoral promises made by Trump. Therefore, we will have to wait and see whatever the aftermath is. American economy expansive cycle seems to be almost done, this might be indicating a deceleration scenario as the most probable one.

Brexit, although it won’t be a reality until 2019, will have notable effects over the EU, specially over Spain which depends more on it than the rest of the European countries. This situation, taking into account its outcome, will have a reflection, more or less, over economic transactions and tourism. China with its debt levels and Yuan depreciation might be causing major instabilities on the area. This, added to the protectionist measures by Trump, will increase instability. There is another element to take into account, commodities value is still low, these doesn’t give any chances to exporting countries, that by now see their perspectives not very optimistic.

Opportunities

Right now, with Trump’s era a new player has come into action, besides instabilities from 2016 like Brexit and China’s deceleration, which affects directly uprisingeconomies as well as the most advanced ones.

Within this global uncertainty context and, taking into account how global economy will deepen the path of laterality, countries must take advantage of the situation and work to go through needed and required reforms to build up a new productive model in order to face the coming deceleration.